Auckland International Airport: Still No Appeal To Buy

2025-02-06 14:35:50 ET

Summary

• Initiated a hold rating on Auckland Airport due to CapEx constraints; stock lost 7% OTC but gained 16.7% on NZX.
• Auckland Airport's CapEx needs and high leverage limit upside despite 23.7% annual EBITDA growth; free cash flow will remain negative.
• Issued shares to fund CapEx and repay debt, avoiding significant leverage but risking future dilution.
• Recommend holding or selling the stock due to better market opportunities with more fundamentally supported upside.

Transport infrastructure is one of my areas of coverage and in September 2024, I added Auckland International Airport Limited (AUKNY) to my coverage. I initiated coverage with a hold rating due to CapEx constraining the upside for the stock. Since then, the stock has lost 7% of its value. At least, that is the case for the OTC ticker ((AUKNY)). The underlying listing AIA at the NZX (New Zealand Stock Exchange) gained 16.7% and 9.2% denominated in US Dollars. Previously the OTC ticker was overpriced by 5% against the home listing, but with the OTC ticker having moved in the opposite direction, the stock is now 12% undervalued against the home listing. In this report, I will be discussing some recent developments for Auckland Airport and assessing whether the stock is now in a better spot for a buy rating....

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